Director Ramirez Holmes moved that the minutes of November 15, 2017 be accepted and approved, and Director Palmer seconded the motion. The minutes were approved by a voice vote of 6-0, with Director McGrail absent.

Vin Pohay, addressed the Board regarding the upcoming Association of California Water Agencies' DC Conference. He questioned why a conference for California water agencies is being held out-of-state, and the value of sending multiple directors, versus sending only one.

President Greci responded that multiple meetings take place at once, making it crucial for at least two directors to attend the conference. Director Ramirez Holmes added that Washington DC is where Congress meets to make national decisions pertaining to California's water. Director Quigley and Director Palmer concurred.

Director Figuers stated that he was not in support of sending any directors to the conference. He explained that such high-level discussions take place at these federal meetings and it would not be effective or beneficial for Zone 7 directors to attend them for the cost. Director Figuers also suggested that the opportunity to attend should be given to a director who has not attended. Director Stevens responded that the California WaterFix is indeed half federal and that all agencies are involved in the approval process. He also expressed his support of two directors attending the conference and finds it to be a valuable learning experience. Director Ramirez Holmes added that she is in favor of one director attending the conference, and an alternating attendance be put into place going forward. In response to Director Ramirez Holmes' suggestion, Director Palmer offered to withdraw her attendance.

Ms. Duerig explained that the conference not only consists of meeting with congressional leaders, but also provides opportunities to meet with executive branch agencies like the Environmental Protection Agency and the Army Corps of Engineers whom Zone 7 works very closely with on a number of flood issues. It is valuable to send two directors due to the limited amount time to attend multiple meetings that take place at once. Director Palmer agreed, and mentioned that in the past, the Army Corps of Engineers and the Bureau of Reclamation have provided a lot of information.

President Greci asked if there were any public comments.

Linda Kelly, addressed the board and stated that she receives ACWA newsletters. She noticed that the deadline for registering to attend the conference is Feb 2nd and asked the directors to consider delaying the decision whether to attend until the January board meeting, after the agenda is available. Director Palmer and Director Quigley responded to her request by stating that the agenda for the conference was already available, and added that flight and hotel reservations need to be made in advance in order to secure lower fares.

Director Stevens moved to approve Item 7(a) and Director Ramirez Holmes seconded the motion. The item was passed by a roll call vote of 5-1, with Director Figuers opposed, and Director McGrail absent.

Director Palmer had questions pertaining to the Geographic Information System (GIS) data integration capabilities with statewide systems, and whether or not it is possible to collaborate with other areas in the region to ensure interoperability. She also asked if the proposal included consultant costs. Ms. Duerig explained that this upgrade would simply provide Zone 7 with a software upgrade. This upgrade would allow for more licenses to enable fieldworkers with means to access files. She also mentioned that the Agency has been a participant in a Tri-Valley GIS workgroup for the last five to ten years to collaborate in ways to improve sharing various layers of information. Ms. Duerig confirmed that the current proposal does not include costs for an outside consultant.

President Greci asked if there were any public comments. None were received.

Director Quigley moved to approve Item 7(d) and Director Palmer seconded the motion. The item was passed by a roll call vote of 6-0, with Director McGrail absent.

Ms. Duerig announced that Sara Whatley, Safety Technician II, was the October Employee of the Month. Ms. Whatley joined Zone 7 in February 2009 as a Safety Technician I and was promoted to Safety Technician II in July 2013. She was recognized for her willingness to take on new tasks when assigned in addition to her everyday duties. When Diana Gaines retired in March, Ms. Whatley became the point person for security and emergency response tasks. She was also involved in projects like implementing the Agency's new Uniform Policy and Program, along with organizing social events like the annual Pit Masters barbeque competition. Ms. Whatley is wonderful to work with and continues to do a fabulous job with her limitless capabilities in tackling any challenge! The Board applauded Ms. Whatley in absentia for her accomplishments.

Congratulations to Retiree Barry Ivy

Ms. Duerig extended congratulations to Barry Ivy, Facilities Maintenance and Construction Supervisor, who retired from the Agency on November 14, after over 10 years of service. Mr. Ivy was present in the audience. The Board recognized and applauded Mr. Ivy for his service.

Director Stevens moved for approval of the resolution of appreciation and Director Quigley seconded the motion, which was approved unanimously. President Greci presented Mr. Ivy a framed and signed resolution of appreciation. The Board thanked him for being an instrumental part of the Agency for many years.

Colleen Winey, Associate Geologist, in the Groundwater Section gave an overview of the proposed amendment to an existing joint project with CEMEX, the quarry operator responsible for mining Lakes A, B and J. Last July, the Board authorized the General Manager to execute an agreement with CEMEX to share the costs of the data gathering and data gap analysis. Ms. Winey explained that the data were collected to assist in the assessment of possible impacts to drinking water, and if CEMEX's surface mining permit is amended it would allow mining into the lower aquifer. Prior to the data gaps analysis, staff estimated that three additional borings with e-logs would address the anticipated data gaps and the Board approved a not-to-exceed amount of $175,000. After Zone 7 and CEMEX evaluated the existing data, staff agreed that a fourth boring would help characterize lithology and allow a nested monitoring well for long-term monitoring of the aquifers, filling the data gap in the current groundwater monitoring network. The additional funding being requested would cover Zone 7's share of the costs. This approach allows Zone 7 to avoid certain administrative costs that would be duplicated if the well was installed as a separate project.

Director Ramirez Holmes asked staff whether this project is currently listed in the Capital Improvement Plan (CIP) or Asset Management Plan, with regard to funds coming from Funds 120 and 130, or whether this project is in addition to it. Ms. Duerig believed that the Chain of Lakes work was included generally in the CIP, which covers different groundwater projects. Director Ramirez Holmes also inquired whether the additional work was anticipated previously, since it was included in the plan. She also asked whether the current amount of funds allocated for this project is adequate enough to cover this type of expense from Fund 120. Ms. Duerig explained that staff anticipated doing additional investigation in the Chain of Lakes area, but did not know specifically how many borings or additional monitoring wells would be needed. She stated that the CIP is updated based on opportunities, and although this was not property that Zone 7 currently owned, CEMEX allowed the installation of the monitoring well prior to transfer in order to obtain as much history as possible. Ms. Duerig also confirmed that there were enough funds allocated for these additions in this year's budget.

Director Stevens questioned whether Zone 7 would have ownership of the nested monitoring well. Ms. Winey reiterated that it would be the Agency's well, and also within the property that will be transferred to Zone 7.

Director Palmer asked whether the data from the monitoring wells and boring samples would be used during Alameda County's SMP-23 review process. In response to Director Palmer's question, David Aladjem, General Counsel, explained that Zone 7's responsibility relied on having quality data. When staff met with CEMEX, there was a general agreement that improved data is beneficial.

President Greci asked if there were any public comments. None were received.

Director Figuers moved to approve Item 9 and Director Quigley seconded the motion. The item was passed by a roll call vote of 6-0, with Director McGrail absent.

Resolution No. 17-93 Amending Agreement with CEMEX to Install Exploratory Borings and a Nested Monitoring Well at Lakes A & B

Jeff Tang, Associate Engineer, in the Flood Control Section gave a presentation on the vegetation maintenance necessary for the Arroyo De La Laguna Emergency Bank Stabilization Project. He provided an update on the current state of the project, the post construction vegetation restoration that was done, as well as permit requirements for long-term vegetation maintenance and monitoring. The initial board approvals only covered the construction contract and did not include the required 5-year maintenance and monitoring. Therefore, staff recommended executing a sole source 5-year contract with Shelterbelt Builders Inc., to provide maintenance for the vegetation restoration for an amount not-to-exceed $451,000. He added that staff anticipated collaborating with Natural Resources Conservation Service (NRCS) to provide monitoring and reporting to satisfy the additional Regulatory Permit requirements. This was expected to be executed under a GM contract for about $8,000. Mr. Tang asked for questions from the Board.

Ms. Duerig noted the revised resolution that was being proposed that clarified the details covered in the presentation.

Director Figuers asked why it would be necessary to execute a contract with a governmental agency if Shelterbelt is well versed in the regulatory permitting. Ms. Duerig explained that Shelterbelt would be doing the maintenance work, but NRCS would be responsible for the monitoring.

Director Ramirez Holmes inquired whether project savings to date were due to grants that were received or the project being under budget. Mr. Tang confirmed that the savings were due to the project being under budget, along with the grants coming in as expected.

Director Palmer asked if the Shelterbelt work would include irrigation. Mr. Tang confirmed that the main purpose would be for irrigation for the vegetation when there is little rain.

President Greci asked if there were any public comments. None were received.

Director Quigley moved to approve Item 10 and Director Palmer seconded the motion. The item was passed by a roll call vote of 6-0, with Director McGrail absent.

Osborn Solitei, Treasurer/Assistant General Manager, Finance gave a presentation which consisted of the Comprehensive Annual Financial Report (CAFR), including the Independent Auditor's Report. David Alvey of Maze and Associates summarized the audit.

Mr. Alvey stated that as the independent external auditor, their goal is to conduct an audit to ensure that the Agency's finances comply with the Generally Accepted Accounting Principles (GAAP), as well as with governmental accounting standards. It is imperative to review records and internal controls to certify that financials used for decision making are free of material misstatement. To render an unmodified audit opinion, the highest level of assurance that a certified public accounting firm can give an agency, is a testament of good financial health. He gave a brief update on one slight change to the footnote in GASB 82, but mentioned that there would be no financial statement impact and no effect on the Agency. Mr. Alvey then explained that the Memorandum on Internal Control was categorized into three main areas: material weaknesses, significant deficiencies and a catch all for other matters. A second portion of the memo is dedicated to evaluating the quality of communication. He was happy to report that the Agency did not display any deficiencies, and commended the finance team for excellent communication during the audit.

Mr. Solitei provided an overview of the CAFR and added that the Finance Committee had been presented with the full details. The Agency's fund accounting structure consists of Governmental Funds, used for Flood Control/Protection activities, and Proprietary Funds, also known as Enterprise Funds, used for business activities related to wholesale and irrigation water supplies. He asked the Board to consider adopting the resolution accepting the Independent Auditor's Report and Comprehensive Annual Financial Report. Mr. Solitei stated that staff submitted both reports to the Government Finance Officers Association to pursue another award, last year being the first year to receive recognition from the organization.

Director Stevens and Director Quigley commended Mr. Solitei and the finance team's efforts for excellent reporting to the Finance Committee, as well as the full Board.

Director Figuers expressed his concerns pertaining to potential increases in pension liabilities in the near future. Director Ramirez Holmes responded to Director Figuers' concerns by explaining the differences in Zone 7's pension plan though ACERA in comparison to other entities. Secondly, she also added that ACERA has not booked Zone 7 as separate, entity so they can only provide an estimate of the county's liabilities. Once GASB included pension liability, the Finance Committee asked staff to generate a separate carve-out, an actuary report, specific to the Agency, as well as to consider a trust fund specifically intended for pension liabilities. She also noted that Zone 7 employees' benefits, pension, and healthcare are negotiated by the county, and that the Agency is only responsible for salary negotiations. Director Ramirez Holmes shared that the Finance Committee is currently working with staff to determine how the Agency can provide Zone 7 employees with more flexibility for their benefits packages.

Director Quigley expressed appreciation for Director Ramirez Holmes' comments. Director Stevens added that Zone 7 employees are different than the county as a whole, and would like to see that they are compensated accordingly.

President Greci asked the public for comment. There were none.

Director Quigley moved to approve Item 11 and Director Stevens seconded the motion. The item was passed by a roll call vote of 6-0, with Director McGrail absent.

Mr. Solitei gave a presentation on the Professional Services Agreements necessary to issue Joint Powers Authority Revenue (JPA) Bonds and showcased what staff has accomplished in pursuit of debt issuance. A debt issuance of $53M is estimated between the Del Valle Water Treatment Plant and Patterson Pass Water Treatment Plant Ozone Projects. He highlighted the finance team needed to pursue debt which would consist of a Financial Advisor, Bond Counsel, Disclosure Counsel, and Underwriters and each of their roles. Mr. Solitei said that Zone 7 would be meeting with three big credit rating agencies: Fitch, Moody's and Standard and Poors (S&P) with the intension of obtaining ratings from two firms. Mr. Solitei asked the Board to consider adopting the resolution to authorize the General Manager to enter agreements with the financing team to issue the JPA Revenue Bonds. He then welcomed questions and comments from the Board.

Director Ramirez Holmes expressed her concerns pursuing the JPA Revenue Bonds and abandoning the State Revolving Fund (SRF). She had no qualms with the costs associated with potential debt issuance, but rather a difficult time asking the Board to make a decision between the JPA Revenue Bonds and the SRF without the benefit of the full discussion and background information. Director Ramirez Holmes also stated that she was uncomfortable authorizing a significant amount of public money that could become sunk costs, which would in turn impact Fund 100. She inquired about the possibility of postponing the decision until after the Board receives a full update on both options. Director Ramirez Holmes also asked Mr. Solitei for an estimate of what would be considered a loss if the Board continued to pursue JPA Revenue Bonds, but opted for the SRF later down the road.

Mr. Solitei addressed Director Ramirez Holmes' concerns and said that the Agency has already experienced major project delays when the biological assessment was required in pursuit of the SRF. Specifications are nearly complete and ready to be advertised in the New Year. All things considered, the Agency cannot afford more delays, and will certainly continue to pursue both options. In the meantime, it would be wise to take the necessary steps to avoid additional costs and setbacks. An estimated cost would be time and materials spent, approximately $150,000 in phase two if the Agency decides to pursue the SRF instead of the JPA Revenue Bonds.

Ms. Duerig clarified that slowing the JPA Revenue Bond process to pursue the SRF would add project costs that far outpace the extra expenditure problem. As Mr. Solitei mentioned, staff hopes to send the projects out for bid in the next few weeks and hoped to award in early March. The project needs to stay on track to avoid any delays, and it will be necessary for financing to be in place in order for these to occur. Director Palmer agreed that waiting to make a decision until all the information is available could be a real downside.

Director Figuers thanked Director Ramirez Holmes for expressing her concerns, but believed it is a small amount of money in the grand scheme of things.

Director Stevens stated that there is a 99.9% chance that the Agency would not be award the SRF or issued a reimbursement until construction is complete due to the many stipulations that the Finance Committee and staff uncovered. In the meantime, interest rates could increase and construction costs could go up.

Ms. Duerig praised the Finance Committee for providing staff with direction regarding the potential delays in pursuing the SRF and addressing that it is more of a reimbursement rather than upfront funds. She then explained the effects of a delayed reimbursement from the SRF and stated that it could take more than two years to receive repayment. Bond revenues, in contrast, are upfront and have no cash flow issues. Mr. Solitei said that reserves within the second year would be in the negative while waiting for repayment from the SRF, making funds unavailable to continue paying for construction.

Director Quigley thanked staff for the additional slide that reflected the information the Finance Committee requested.

Director Palmer asked how much the savings would be if the SRF went through. Director Ramirez Holmes responded and said approximately $13M, which is why she hesitated to abandon this opportunity.

Director Figuers stated that the SRF seems to be better for small and medium size projects, but insufficient cash flow could prevent use for large projects.

President Greci asked if there were any public comments. None were received.

Director Stevens moved to approve Item 12 and Director Figuers seconded the motion. The item was passed by a roll call vote of 5-1, with Director Ramirez Holmes opposed, and Director McGrail absent.

Mr. Solitei introduced Kevin Civale, Disclosure Counsel at Stradling Yocca Calson & Rauth, who gave a presentation on how to comply with Federal Securities Laws. He previously provided extensive training to the key staff. The Board received an overview of disclosure responsibilities. Mr. Civale emphasized the importance of presenting investors with valid material information. The Official Statement must accurately reflect the Agency's true financial conditions, as it is ultimately used to assist potential reasonable investors in their decision-making process. A Contractual commitment agreeing to update information annually, provide notices on reserve funds being drawn and disclosing defaults may be necessary. Board members and staff must also be cautious in making public presentations to avoid misinformation or any potential Federal Securities Law implications when potential investors may be present. The Securities Exchange Commission has issued personal fines to municipal officials for failures. Although the Board is not solely responsible for ensuring that every piece of information is correct, it will be held accountable in ensuring that staff has implemented a robust system.

Director Ramirez Holmes asked what types of consequences could result from disclosure failure. Mr. Civale responded that personal fines could be issued in those circumstances.

Director Stevens commended Ms. Duerig and Mr. Solitei for leading the Agency in pursuing debt financing since 2015.

President Greci temporarily adjourned the meeting and Director Ramirez Holmes left at 8:54 p.m.

Linda Kelly addressed the Board, describing the newly-reinstated Pleasanton Progress newsletter. She suggested that Zone 7 might want to consider similar outreach material so the community learns more about the people of Zone 7.

Director Stevens moved that the minutes of November 15, 2017 be accepted and approved, and Director Quigley seconded the motion. The minutes were approved by a voice vote of 5-0, with Directors McGrail and Ramirez Holmes absent.

Director Figuers reported that he attended the Groundwater Committee and the Energy Committee meetings at the ACWA Conference. At the Groundwater Committee meeting he learned that massive groundwater basin evaluations have begun in areas of Ventura County. This is in order to gain a better understanding of the geology and framework of the basins. The Energy Committee meeting covered concepts on the possibility of generating electricity from well pumping.

Director Palmer also attended the ACWA Conference and was pleased to learn that technical support services for GIS systems were working to integrate statewide systems. She highlighted the ACWA website link provided at the top of her Written Report for more information regarding her listed topics from the conference. Director Palmer added that she had an informal gathering with the Region 5 Board, and reported that their first meeting of the year will be held on January 24th.

Director Palmer announced that the State Legislature remains in recess but ACWA opposes a potential tax being put on drinking water and asked everyone to be aware of it. The conference also covered the State Water Resources Control Board moving forward towards finalizing Definition for State Wetlands and Procedures for Discharges of Dredged and Fill Materials to Waters of the State, which could impact permitting requirements for flood operations.